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Press Release: White Mountains Reports Fourth -5-

· 02/05/2021 08:00
Net investment income 7.5 14.1 -- 14.7 -- 43.4 79.7 Net investment income (expense) - BAM surplus note interest 27.4 (27.4) -- -- -- -- -- Net realized and unrealized investment gains 11.0 16.1 -- 6.3 -- 219.8 253.2 Net unrealized investment gains from investment in MediaAlpha -- -- -- -- -- 180.0 180.0 Realized gain from the MediaAlpha transaction with Insignia -- -- -- -- -- 67.5 67.5 Advertising and commission revenues -- -- 193.4 -- 48.8 6.9 249.1 Other revenue -- 1.6 39.7 .2 -- 6.1 47.6 Total revenues 59.0 7.6 233.1 21.2 48.8 523.7 893.4 Expenses: Insurance acquisition expenses 3.3 2.4 -- -- -- -- 5.7 Other underwriting expenses -- .4 -- -- -- -- .4 Cost of sales -- -- -- -- 40.6 7.5 48.1 General and administrative expenses 1.6 48.9 132.2 10.1 5.7 122.5 321.0 General and administrative expenses - MediaAlpha transaction with Insignia related costs -- -- -- -- 6.8 -- 6.8 Broker commission expenses -- -- 64.8 -- -- -- 64.8 Change in fair value of contingent consideration earnout liabilities -- -- 2.1 -- -- -- 2.1 Amortization of other intangible assets -- -- 19.4 .2 1.6 .6 21.8 Interest expense -- -- 16.7 .1 .2 .6 17.6 Total expenses 4.9 51.7 235.2 10.4 54.9 131.2 488.3 Pre-tax income (loss) $ 54.1 $(44.1) $(2.1) $10.8 $ (6.1) $ 392.5 $405.1 (1) Kudu's results are from April 4, 2019, the date White Mountains began consolidating Kudu, to December 31, 2019. (2) MediaAlpha's results are from January 1, 2019 to February 26, 2019, the date of the MediaAlpha transaction with Insignia. WHITE MOUNTAINS INSURANCE GROUP, LTD. SELECTED FINANCIAL DATA (millions) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, BAM 2020 2019 2020 2019 -------------- Gross par value of primary market policies issued $5,154.6 $3,732.4 $15,279.6 $10,405.1 Gross par value of secondary market policies issued 357.2 190.8 2,022.9 1,311.8 Gross par value of assumed reinsurance -- -- 36.9 1,130.7 Total gross par value of market policies issued $5,511.8 $3,923.2 $17,339.4 $12,847.6 Gross written premiums $16.1 $(2.5) (1) $61.7 $38.7 (1) MSC collected 22.0 25.1 (1) 68.9 68.0 (1) Total gross written premiums and MSC collected $38.1 $22.6 $130.6 $106.7 Present value of future installment MSC collections -- -- .3 .3 Gross written premium adjustments on existing installment policies .3 -- .4 (.1) Gross written premiums and MSC from new business $38.4 $22.6 $131.3 $106.9 Total pricing 70 bps 58 bps 76 bps 83 bps As of December As of September As of December 31, 2020 30, 2020 31, 2019 Policyholders' surplus $ 324.7 $ 347.2 $ 402.4 Contingency reserve 86.4 81.6 68.2 Qualified statutory capital 411.1 428.8 470.6 Statutory net unearned premiums 45.2 43.6 39.3 Present value of future installment premiums and MSC 14.0 14.4 13.7 HG Re, Ltd collateral trusts at statutory value 417.0 381.0 314.0 Fidus Re, Ltd collateral trust at statutory value 100.0 100.0 100.0 Claims paying resources $ 987.3 $ 967.8 $ 937.6 Three Months Ended Twelve Months Ended December 31, December 31, HG Global 2020 2019 2020 2019 --------- Net written premiums $ 13.9 $ (1.6) (1) $ 53.0 $ 33.6 (1) Earned premiums $ 4.6 $ 2.1 $ 18.7 $ 13.1 As of December 31, As of September As of December 2020 30, 2020 31, 2019 Unearned premiums $ 196.1 $ 186.8 $ 161.7 (1) Deferred acquisition costs $ 54.1 $ 51.1 $ 42.8 (1) (1) During the fourth quarter of 2019, BAM issued policy endorsements for certain policies issued in periods prior to the second quarter of 2018. The impact of the policy endorsements for the three months and twelve months ended December 31, 2019 was a decrease to BAM's gross written premiums of $13.4 and an increase of $13.4 to MSC collected. As a result, for the three months and twelve months ended December 31, 2019, written premiums ceded to HG Global were reduced by $11.0. Additionally, as of December 31, 2019, unearned premiums ceded to HG Global were reduced by $9.7 and deferred acquisition costs ceded to HG Global were reduced by $2.5. WHITE MOUNTAINS INSURANCE GROUP, LTD. SELECTED FINANCIAL DATA (CONTINUED) (millions) (Unaudited) Three Three Twelve Months Months Months Twelve Ended Ended Ended Months Ended December December December December 31, NSM 31, 2019 31, 2020 31, 2019 2020 -------------------- Commission revenues $ 45.8 $ 58.3 $ 193.4 $ 232.5 Broker commission expenses 15.9 18.9 64.8 75.3 Gross profit 29.9 39.4 128.6 157.2 Other revenues 12.0 15.0 39.7 52.6 General and administrative expenses 40.8 45.9 132.2 176.9 Change in fair value of contingent consideration earnout liabilities (3.5) (1.7) 2.1 (3.3) Amortization of other intangible assets 5.9 10.5 19.4 26.7 Interest expense 4.5 6.0 16.7 22.1 GAAP pre-tax loss (5.8) (6.3) (2.1) (12.6) Income tax benefit (2.3) (2.9) (.6) (5.7) GAAP net loss (3.5) (3.4) (1.5) (6.9) Add back: Interest expense 4.5 6.0 16.7 22.1 Income tax benefit (2.3) (2.9) (.6) (5.7) General and administrative expenses -- depreciation .8 1.6 2.8 4.5 Amortization of other intangible assets 5.9 10.5 19.4 26.7 EBITDA 5.4 11.8 36.8 40.7 Add back: Change in fair value of contingent consideration earnout liabilities (3.5) (1.7) 2.1 (3.3) Non-cash equity-based compensation expense -- 1.4 -- 2.4 Impairments of intangible assets -- -- -- 6.2 Acquisition-related transaction expenses 4.2 1.6 5.6 7.2 Fair value purchase accounting adjustment for deferred revenue .9 -- .9 -- Investments made in the development of new business lines -- .3 .3 .9 Restructuring expenses 1.9 1.6 2.3 4.8 Adjusted EBITDA $ 8.9 $ 15.0 $ 48.0 $ 58.9 Add: Kingsbridge's Adjusted EBITDA from January 1, 2020 to April 7, 2020 2.6 Pro forma adjusted EBITDA $ 61.5 WHITE MOUNTAINS INSURANCE GROUP, LTD. SELECTED FINANCIAL DATA (CONTINUED) (millions) (Unaudited) Three Months Three Months Ended Ended Twelve Months December 31, December 31, Ended December Kudu 2019 2020 31, 2020 -------------------- GAAP pre-tax income $ 5.8 $ 18.7 $ 27.6 Income tax expense 1.5 3.8 7.0 GAAP net income 4.3 14.9 20.6 Add back: Interest expense -- 1.7 6.0 Income tax expense 1.5 3.8 7.0 Amortization of other intangible assets -- -- .3 EBITDA 5.8 20.4 33.9 Add back: Net unrealized investment gains (3.2) (14.4) (15.9) Non-cash equity-based compensation expense .4 .3 .4 Acquisition-related transaction expenses .5 2.1 3.7 Adjusted EBITDA $ 3.5 $ 8.4 $ 22.1 Add: Adjustment to annualize partial year revenues 2.1 Annualized Adjusted

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February 05, 2021 08:00 ET (13:00 GMT)